He once visited The Virgin Islands... they are now called The Islands
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trading is consolidative to end a busy week that included the -50 bp Fed rate cut. Wall Street is slightly lower at the open. The Dow and S&P 500 are -0.2% lower and the NASDAQ is down fractionally after yesterday's surge that saw the NASDAQ zoom 2.5% higher, while the 1.7% and 1.26% gains in the S&P 500 and Dow pushed them to record highs at 5713 and 42,025, respectively. The VIX is down -1.5% to 16.09. Note it is triple witching today with an estimated $5 tln in options expiring that could see increased volatility into the close. FedEx has crashed -14% after reporting weaker than expected profits and cut its outlook amid signs of a more price sensitive consumer. Treasury yields are higher but close to 2024 lows, still equilibrating to the Fed's move while assessing chances for another big cut in November. The wi 2-year is up 4 bps to 3.588%, with the wi 5-year 3.2 bps cheaper at 3.517%, while the wi 7-year is 3 bps higher at 3.613% ahead of next week's 2-, 5-, and 7-year auctions. The 10-year is up 3 bps to 3.743%. The curve is little changed at 11.4 bps from 12 bps yesterday. The DXY is flat at 100.703, off of the overnight peak of 100.887 and firmer versus JPY at 143.89 after the BoJ signaled it is in no hurry to be hiking rates.
Intuit called 'Strong Sell' by Spruce Point, sees 40%-80% long-term downside
Spruce Point Capital Management issued a report entitled, "An Intuitively Taxing Valuation," that outlines why the firm believes and estimates that shares of Intuit "face up to 40% - 80% potential long-term downside and market underperformance risk." Spruce Point stated: "Long viewed as a solid, if unspectacular, grower and a solid corporate citizen, Intuit has been a beneficiary of hype surrounding artificial intelligence (AI) and currently trades at 11x NTM revenue, making it one of the most richly valued software companies. However, we have grave concerns about underlying trends in its core franchises, questionable large M&A transactions, the credibility and transparency of the Company's accounting and financial reporting, the Company's increasingly frequent episodes of alleged consumer-unfriendly behavior, and the sustainability of its current premium valuation." The firm added: "However, in an attempt to be fair, we use reasonable peer company multiples for our "low" case and either Intuit's current 11x revenue multiple or the highest valued peer company as the "high" case. However, even using these assumptions, which we believe are generous, we see 21%-79% long-term potential downside risk. In addition, since some analysts reference free cash flow multiples for large, mature software companies, we perform an adjusted FCF based valuation analysis that implies 53%-74% potential downside in Intuit's share price."
Evercore ups Nike price target to $110, calls Hill return 'best case scenario'
Evercore ISI analyst Michael Binetti raised the firm's price target on Nike to $110 from $105 and keeps an Outperform rating on the shares after the company announced that CEO John Donahoe will retire and veteran Elliott Hill will return as CEO, which the firm calls "a best case scenario transition." The firm says it has long thought Elliott was "at the top of the list" of potential CEO successors and that while his departure from the company in 2020 as Nike deemphasized wholesale was "disappointing," Evercore "can't think of a better executive with the broad-based experience" needed and has "even more conviction that he is the best executive possible today-given the challenges in front of the business."
$AMZN Amazon price target raised to $240 at Evercore ISI --- Outperform Rated
Lower for longer
While the term "transitory" has fallen out of favor with the Fed, the word "recalibrate" is now in vogue. Chair Jerome Powell used the expression a total of 10x during his post-meeting press conference on Wednesday, and the markets are just loving it. Some time was needed to digest the new phrase, but it seems that it'll be one to add to the central bank lexicon going forward.
Translation: The Fed's past policy stance is being recalibrated to "lower for longer" to support the labor market and economic growth. As long as inflation doesn't resurface, the easing cycle should continue through 2026 and beyond. The accommodative stance is unleashing some animal spirits, with bullish forces igniting hopes of a soft landing, healthy corporate profits and resurgent growth.
Risk assets responded in kind on Thursday, and then some. The Dow Jones Industrial Average hit 42,000 for the first time in its history, the S&P 500 scored its 39th record close of the year, and the YTD gains for the Nasdaq Composite also returned to 20%, fueled by a rally in tech. Economic data on the labor market further boosted sentiment, with the number of Americans filing for initial jobless claims falling to its lowest level since May.
SA commentary: "In my view, this is great for markets," said Victor Dergunov, Investing Group Leader of The Financial Prophet. "It states that the Fed is serious about supporting the market. In a sense, the Fed put is back, which is excellent for high-quality stocks and other risk assets advancing from here. However, we must avoid a significant reversal. Also, it's crucial that the market focuses on the positives and doesn't panic because the Fed brought the bazooka out." (37 comments)
New sneakers
Nike (NKE) turned some heads by announcing that its CEO John Donahoe will step down and be replaced by retired insider Elliott Hill. Hill spent his career at Nike in various senior leadership positions across Europe and North America, and then retired following his role as president of Consumer & Marketplace in 2020. The news sent Nike shares soaring 7.6% AH on Thursday, with investors appearing confident in Hill's leadership as the footwear giant faces profit volatility, guidance shortcomings, competition headwinds, and a lack of strategic long-term clarity. (9 comments)
Compromised comms
Disney (DIS) will stop using corporate messaging platform Slack (CRM) following a cyberattack in which more than a terabyte of the company's data was leaked online. The data from thousands of Disney's Slack channels contained discussions about ad campaigns and studio technology, which were exposed by hacker group Nullbulge. Many teams have already started to transition to "streamlined enterprise-wide collaboration tools," according to an internal memo, with most of Disney's businesses expected to stop using the service later this year. (9 comments)
We understand?
In its latest quarterly results, FedEx (FDX) missed Q1 expectations and dropped its outlook for FY25, dragging shares 11% lower AH on Thursday. The package delivery behemoth blamed reduced demand for priority services, constrained yield growth, as well as higher operating expenses. The dimmed outlook will likely end a nine-day winning streak when the stock opens for regular trading today and reflects a very competitive pricing environment and challenging industrial economy. Rival UPS (UPS) shares also fell 2.4% AH following the results. (10 comments)
Today's Markets
In Asia, Japan +1.5%. Hong Kong +1.4%. China flat. India +1.6%.
In Europe, at midday, London -0.4%. Paris -0.7%. Frankfurt -0.7%.
Futures at 7:00, Dow +0.1%. S&P -0.3%. Nasdaq -0.5%. Crude -0.5% to $70.78. Gold +0.9% to $2,638.90. Bitcoin +2.1% to $63,663.
Ten-year Treasury Yield +1 bp to 3.73%.
Today's Economic Calendar
1:00 PM Baker Hughes Rig Count
2:00 PM Fed's Harker: Economic Outlook
Companies reporting earnings today »
What else is happening...
Darden (DRI) rallies on earnings, Uber-Olive Garden partnership.
OpenAI funding round in final stages, investor list soon finalized.
Bank of Japan keeps interest rate steady, as expected.
Target's CFO hire sparks intrigue at PepsiCo (PEP), Celsius.
Buffett's Berkshire (BRK.B) continues to trim stake in BofA (BAC).
Lightest fall maintenance season for U.S. refineries in three years.
Mobileye surges as Intel (INTC) has no plans to divest stake.
Ford (F) faces strike threat at tool and die plant in Michigan.
Warner Music (WMG) to lay off more employees in restructuring drive.
Societe Generale: How four election outcomes could impact markets.
TransDigm declares special cash dividend of $75.00 per share
TransDigm Group announced that its Board of Directors has authorized and declared a special cash dividend of $75.00 on each outstanding share of common stock and cash dividend equivalent payments on eligible vested options granted under its stock option plans. The record date for the special dividend is October 4, 2024, and the payment date for the dividend is October 18, 2024.
gooooooooood morning bobber
Darden price target raised to $176 from $165 at JPMorgan
JPMorgan raised the firm's price target on Darden to $176 from $165 and keeps an Overweight rating on the shares following the earnings report. The company is re-establishing its proven "Price Certainty" pre-Covid playbook at Olive Garden and benefitting from continued strength in steak, the analyst tells investors in a research note.
07:38 EDT TMO
Thermo Fisher price target raised to $670 from $650 at JPMorgan
JPMorgan raised the firm's price target on Thermo Fisher to $670 from $650 and keeps an Overweight rating on the shares following the investor day. The event focused on Thermo's ability to drive share gains on the back of its proven growth strategy, the analyst tells investors in a research note. The firm walked away more positive on the company after the event, citing "concrete examples of its three-pillar growth strategy driving share gains across the portfolio." JPMorgan reiterates Thermo Fisher as a top pick.
(Bloomberg) - The owner of the shuttered Three Mile Island nuclear plant in Pennsylvania will invest $1.6 billion to revive it, agreeing to sell all the output to Microsoft Corp. as the tech titan seeks carbon-free electricity for data centers ..$MSFT https://t.co/PNlZ5Fl76p
— Carl Quintanilla (@carlquintanilla) September 20, 2024
Nike CEO change positive for the stock, says Piper Sandler
Piper Sandler views Nike appointing Elliott Hill as the new CEO, with John Donahoe stepping down earlier than the Street was expecting, as a positive for the stock. The news removes an overhang in leadership and creates a "potentially interesting setup" with the investor day in November, the analyst tells investors in a research note. The firm says bringing a veteran back after significant turnover at the company "should also help culture-wise." At the same time, Piper continues to question the second half of fiscal 2025 improvement baked into Nike's guidance and expects the stock to stay range-bound until there's more color on the fundamentals and the new strategy. It keeps a Neutral rating on the shares with an $80 price target.
Upgrades - Sep 20, 2024
$AGNC: Wells Fargo Upgrades to Overweight from Equal Weight - PT $12 (from $10)
$APTV: Wells Fargo Upgrades to Overweight from Equal Weight - PT $87 (from $78)
$ASMB: Jefferies Upgrades to Buy from Hold - PT $35 (from $2)
$BOKF: Truist Securities Upgrades to Buy from Hold - PT $123 (from $112)
$CNTA: Morgan Stanley Upgrades to Overweight from Equalweight - PT $26 (from $11)
$NLY: Wells Fargo Upgrades to Overweight from Equal Weight - PT $23 (from $19)
$VC: Wells Fargo Upgrades to Overweight from Equal Weight - PT $122 (from $115)
Downgrades - Sep 20, 2024
$ACRE: Wells Fargo Downgrades to Underweight from Equal Weight - PT $7 (from $7.50)
$CMTG: Wells Fargo Downgrades to Underweight from Equal Weight - PT $8
$DAN: Wells Fargo Downgrades to Underweight from Equal Weight - PT $9
$DRI: Bernstein Downgrades to Market Perform from Outperform - PT $180 (from $190)
$FDX: Morgan Stanley Downgrades to Underweight from Equalweight - PT $200 (from $215)
$FRO: SEB Equities Downgrades to Sell from Buy - PT $19.05
$INSW: SEB Equities Downgrades to Hold from Buy - PT $55
$NTBL: JMP Securities Downgrades to Market Perform from Market Outperform
$PARR: Piper Sandler Downgrades to Neutral from Overweight - PT $23 (from $37)
$PB: Truist Securities Downgrades to Hold from Buy - PT $79 (from $81)
$PBF: Piper Sandler Downgrades to Underweight from Neutral - PT $25 (from $47)
$PEP: Morgan Stanley Downgrades to Equalweight from Overweight - PT $185
$RPD: RBC Capital Downgrades to Sector Perform from Outperform - PT $40 (from $50)
$STNG: SEB Equities Downgrades to Hold from Buy - PT $73
$VEL: Wells Fargo Downgrades to Underweight from Overweight - PT $20
Applied Digital Corp call volume above normal and directionally bullish
Bullish option flow detected in Applied Digital Corp with 14,012 calls trading, 1.3x expected, and implied vol increasing over 1 point to 127.25%. Sep-24 6.5 calls and Sep-24 6 calls are the most active options, with total volume in those strikes near 5,800 contracts. The Put/Call Ratio is 0.11. Earnings are expected on October 15th.
GameStop CEO Cohen to pay $985,320 civil penalty to FTC
The Federal Trade Commission announced that Ryan Cohen, managing partner of RC Ventures and CEO of GameStop, will pay a $985,320 civil penalty to settle charges that his acquisition of Wells Fargo (WGC) shares violated the Hart-Scott-Rodino Act. According to the complaint, Cohen acquired more than 562,000 Wells Fargo voting securities resulting in aggregated holdings of Wells Fargo securities that exceeded HSR filing thresholds. Cohen's purchase triggered an obligation to file an HSR form with federal antitrust agencies and wait before completing the acquisition, yet Cohen failed to do so, the FTC said in a statement
PayPal announces new partnership with Amazon Buy with Prime
PayPal (PYPL) announced a new partnership with Amazon (AMZN) Buy with Prime. "For participating brands integrating using the Buy with Prime API, PayPal is now available at checkout after shoppers log in to their Amazon account. And starting next year, Prime members will be able to perform a one-time link to their Amazon account to their PayPal account so that Prime free, fast shipping benefits are available automatically whenever they use PayPal while shopping with Buy with Prime on participating merchants' websites," PayPal said in a newsletter to investors.
CVNA new highs!!!!!!!!!!!!!!!!!!!!!
🔸THE 50BP VS. 25BP IS NOISE, FOCUS ON THIS INSTEAD SAYS WELLS FARGO
On Wednesday, the FDA granted 510(k) clearance to Vivos Therapeutics, Inc.’s (NASDAQ:VVOS) flagship oral medical device, which is used to treat moderate to severe obstructive sleep apnea (OSA) and snoring in children.
Recent published studies report up to 10.1 million U.S. children (ages 6-17) are estimated to suffer from pediatric OSA.
Vivos’ DNA appliance is non-invasive, safe, comfortable, affordable, and highly effective. It is designed to reduce nighttime snoring and treat moderate to severe obstructive sleep apnea in children aged 6 to 17.
yes
Bausch + Lomb rises 9.9%
Bausch + Lomb is up 9.9%, or $1.84 to $20.40.
U.S. housing starts popped 9.6% to a 1.356 M pace in August
U.S. housing starts popped 9.6% to a 1.356 M pace in August, better than forecast and the best since April.Starts had slumped -6.9% to 1.237 (1.238) M in July, the weakest since May 2020, after bouncing 1.1% to 1.329 M in June. Building permits rose 4.9% to 1.475 M after dropping -3.3% to 1.406 (was 1.396) M.Single family starts surged 15.8% to 0.992 M after plunging -12.8% to 0.857 (was 0.851) M previously. Multi-family starts declined -4.2% to 0.364 M after jumping 9.8% to 0.380 (was 0.387) M.Starts under construction declined -1.9% to 1.509 M follow the -2.0% slide to 1.538 (was 1.539) M.Housing completions bounced 9.2% to 1.788 M after falling -5.1% to 1.637 (was 1.529) M.Building permits rose 4.9% to 1.475 M after dropping -3.3% to 1.406 (was 1.396) M.
Super Size Me?
Cheers can be heard from the investing world as the much-anticipated Fed easing cycle finally begins. It's been four years since the FOMC last cut rates, and 14 months of holding them steady, so today's rate decision, press conference and policy projections will all be a big deal. There's been much debate over how fast the Fed will move as the starting gun is fired, so stay tuned for the headlines on Seeking Alpha starting at 2 PM ET.
Soft landing? While inflation data has drifted downward toward the Fed's 2% goal, unemployment has risen faster than expected since the last FOMC decision in July. That has led to worries by the central bank about cooling labor market conditions, which is harder to stop once demand for workers has softened. It's even prompted to talk about a stronger level of rate cuts, but the majority of Wall Street Breakfast subscribers (79.4%) still expect the Fed to trim its benchmark lending rate by 25 basis points, compared to some (20.6%) who see a 50-bps reduction.
While the pace of the initial cut will be revealed in the coming hours, a bigger area of focus will be the federal funds rate range for the end of 2024, next year, and in the longer term. Look to the FOMC's dot plot for that insight. In the last Summary of Economic Projections, issued on June 12, the median fed funds rate projection was 5.1% at the end of 2024 and 4.1% for 2025, and how much that changes from the prior outlooks will be exceptionally important for investors.
SA commentary: "While the near-term volatility could persist, a more accessible monetary stance should lead to improved growth and increased liquidity, a highly constructive dynamic for high-quality stocks and other risk assets," Investing Group Leader Victor Dergunov wrote in Finally, It's Time To Cut Rates. "Corporate earnings remain healthy, and despite the potential temporary growth slowdown in AI and other segments, we could see improving and better-than-expected earnings in future quarters."
Easing cycle to follow lower inflation and mortgage rates
AI infrastructure
Looking to meet growing demand, BlackRock (BLK) and Microsoft (MSFT) are planning a more than $30B artificial intelligence investment fund to build data centers and energy projects. The Global AI Infrastructure Investment Partnership would be one of the biggest investment vehicles ever raised on Wall Street through Global Infrastructure Partners. Abu Dhabi-backed investment firm MGX and Microsoft are the fund's general partners, and Nvidia (NVDA) is providing expertise. The fund aims to mobilize up to $100B in total investment potential when including debt financing. (12 comments)
Risk premium?
Secretary of State Antony Blinken is in the Middle East for the 10th time since the war in Gaza began nearly a year ago. The conversations in Cairo come after the Biden administration greenlit $1.3B in military aid for Egypt, overriding congressional requirements that the U.S. hold back some funding if adequate progress is not made on human rights. Tensions are also escalating in the region following a pager attack that was widely attributed to Israel and targeted thousands of members of the Lebanese terror group Hezbollah, but oil doesn't appear to be pricing in any risk at the moment. (2 comments)
Next strike
As organized labor notches more wins, around 45K dockworkers have begun threatening industrial action at U.S. East Coast and Gulf of Mexico ports. "A strike on Oct. 1 seems more likely as time is running out," warned the International Longshoremen's Association. Negotiations for a new labor contract have stalled, but the United States Maritime Alliance, which represents port employers including ZIM (ZIM) and Maersk (OTCPK:AMKBY), is willing to resume talks "at any time." A looming strike has raised supply chain concerns ahead of the busy holiday season, with retailers bringing in products earlier or rerouting shipments.
Today's Markets
In Asia, Japan +0.5%. Hong Kong closed. China +0.5%. India -0.2%.
In Europe, at midday, London -0.7%. Paris -0.5%. Frankfurt -0.1%.
Futures at 7:00, Dow +0.1%. S&P +0.1%. Nasdaq +0.2%. Crude -1.5% to $68.93. Gold +0.4% to $2,603.20. Bitcoin +1.1% to $59,892.
Ten-year Treasury Yield unchanged at 3.67%.
Today's Economic Calendar
07:00 AM MBA Mortgage Applications
08:30 AM Housing Starts and Permits
10:00 AM Atlanta Fed's Business Inflation Expectations
10:30 AM EIA Petroleum Status Report
11:00 AM Treasury Buyback Announcement
02:00 PM FOMC Announcement
02:30 PM Fed Chair Press Conference
04:00 PM Treasury International Capital
Companies reporting earnings today »
What else is happening...
Google (GOOGL) wins legal battle against $1.7B EU digital ad case.
JPMorgan may replace Goldman as Apple's (AAPL) credit card partner.
U.S. Steel (X) gains as Nippon (OTCPK:NPSCY) review is extended.
Chevron (CVX) CEO: LNG export pause undermines energy security.
Albertsons falls on last day of FTC trial over Kroger's (KR) $25B deal.
Instagram (META) launches Teen Accounts with parental controls.
Snap (SNAP) releases latest AR glasses, targeted at developers.
SpaceX doubles Starlink Wi-Fi order backlog with UAL contract.
DOT greenlights Alaska Air (ALK)-Hawaiian (HA) $1.9B merger.
Point72's Steve Cohen said to no longer invest clients' capital
MicroStrategy prices upsized $875M convertible senior note offering
MicroStrategy announced the pricing of its offering of $875 million aggregate principal amount of 0.625% convertible senior notes due 2028. The notes will be sold in a private offering to persons reasonably believed to be qualified institutional buyers in reliance on Rule 144A under the Securities Act of 1933, as amended. MicroStrategy also granted to the initial purchasers of the notes an option to purchase, within a 13-day period beginning on, and including, the date on which the notes are first issued, up to an additional $135 million aggregate principal amount of the notes. The offering was upsized from the previously announced offering of $700 million aggregate principal amount of notes. The offering is expected to close on September 19, 2024, subject to satisfaction of customary closing conditions. The conversion rate for the notes will initially be 5.4589 shares of MicroStrategy class A common stock per $1,000 principal amount of notes, which is equivalent to an initial conversion price of approximately $183.19 per share. The initial conversion price of the notes represents a premium of approximately 40% over the U.S. composite volume weighted average price of MicroStrategy's class A common stock from 1:00 p.m. through 4:00 p.m. Eastern Daylight Time on September 17, 2024, which was $130.8477.
Decreases in stock option open interest $PLTR $QCOM $INTC $SOFI $ASTS $PTON $KSS $WFC $NVDA $RUM $CVNA $SNAP
Decreases in stock option open interest $PLTR $QCOM $INTC $SOFI $ASTS $PTON $KSS $WFC $NVDA $RUM $CVNA $SNAP
Morgan Stanley says early Apple iPhone lead times have 'little predictive power'
Morgan Stanley notes that as of Tuesday, September 17, four days after pre-orders started, Apple iPhone 16 lead times have doubled from last Friday and are longer internationally than in the U.S., but are still tracking lower year-over-year. However, lead times as a proxy for demand this early have "little predictive power," contends the analyst, who argues that the trajectory of lead times in the next 10 days is more important. First two-week lead times are directionally predictive of next 12 month shipments at the model level, but not for December quarter iPhone build revisions or total iPhone shipments, adds the analyst, who sees near-term stock downside of $200 and would be buyers given the firm's view that a multi-year upgrade cycle is "a when, not an if." Morgan Stanley maintains an Overweight rating and $273 price target on Apple shares.
Deutsche Bank 'constructive' after Snap partners summit
Deutsche Bank left Snap's partner summit with "constructive views" on the coming "Simple Snapchat" interface. The interface introduces new monetization formats and aligns the app's functionality with TikTok and Reels, which should bolster higher user engagement, the analyst tells investors in a research note. The firm says the simplified architecture embeds advertising opportunities across all of Snaps' consumer surfaces. Perhaps most importantly, the messaging surface now will feature stories, sponsored snaps, and promoted places, thereby monetizing surfaces that until recently were highly utilized, but under-monetized, says Deutsche Bank. It keeps a Buy rating on Snap shares with a $14 price target.
EA
EA lack of guidance upside led to late-day underperformance, says Morgan Stanley
After Electronic Arts' investor day, Morgan Stanley analyst Matthew Cost said the biggest new data point from the event was EA's goal of significantly outpacing game market growth, which it pegged at 4%, through FY27. All of the financial targets offered were roughly in line with prior expectations and the lack of material upside likely led to EA shares' underperformance in the final hour of trading on September 17, contends the firm, which adds that the $5B, three-year capital return target was significant increase from the past three years, calling this "a clear incremental positive." The firm, which maintains a balanced view of EA and continues to see execution on non-sports titles as the largest potential driver of sentiment and earnings revisions going forward, keeps an Equal Weight rating and $150 price target on the shares.
Increases in stock option open interest $ZI $ROKU $NVDA $INTC $DIS $SLB $CHPT $LAZR $AGNC $CVNA
Cintas price target raised to $225 from $212.50 at Truist
Truist raised the firm's price target on Cintas to $225 from $212.50 and keeps a Buy rating on the shares ahead of the company's Q1 results next week. The firm anticipates another earnings beat against a more difficult comp due to working day headwinds and normalizing price and employment growth, adding that Cintas is poised to continue an impressive beat and raise streak in FY25 even as overall payrolls growth cools, the analyst tells investors in a research note.
U.S. MBA mortgage applications jumped 14.2% in the week ending September 13. It was the fourth consecutive month of improvement, with applications rising 1.4%, 1.6% and 0.5% respectively in the previous three weeks. Purchases rose 5.4%, after an increase of 1.8% in the week prior. Refinancing jumped 24.2%, following a 0.9% improvement in the week ending September 6. The 30-year rate dropped to 6.15% from 6.29%. It stood at 7.31% in the corresponding period of 2023. The 5-year ARM meanwhile declined to 5.66% from 5.85%. It was 6.42% a year earlier.
General Mills backs FY25 adjusted EPS view down 1% to up 1%
Backs FY25 organic net sales view flat to up 1%. Backs FY25 adjusted operating profit down 2% to flat. Backs FY25 free cash flow conversion view at least 95%. The company said, "Amid a continued uncertain macroeconomic backdrop for consumers across its core markets, General Mills expects volume trends in its categories will gradually improve in fiscal 2025, though full-year category dollar growth is expected to be below the company's long-term growth projections. The company expects to accelerate its organic net sales growth by delivering remarkable experiences across its leading food brands, resulting in improved household penetration and stronger market share trends versus the prior year. Its fiscal 2025 plans call for product news and innovation focused on taste, health, convenience, and value, supported with strong brand campaigns and omnichannel visibility. The company expects to generate HMM cost savings of roughly 4 to 5 percent of cost of goods sold, which is expected to exceed its anticipated input cost inflation of 3 to 4 percent of cost of goods sold. Additionally, it expects to reinvest potential margin flexibility back into the business, including plans for a significant increase in brand-building investment in fiscal 2025 to drive improved volume performance.
Upgrades - Sep 18, 2024
$AMBC: Roth/MKM Upgrades to Buy from Neutral - PT $15 (from $13)
$BAK: UBS Upgrades to Buy from Neutral - PT $10 (from $7.70)
$EXR: Jefferies Upgrades to Buy from Hold - PT $204 (from $162)
$GEHC: BTIG Upgrades to Buy from Neutral - PT $100
$NMIH: RBC Capital Upgrades to Outperform from Sector Perform - PT $48 (from $40)
$SIRI: Guggenheim Upgrades to Buy from Neutral - PT $30
$SLG: Compass Point Upgrades to Neutral from Sell - PT $60 (from $35)
$VFC: Barclays Upgrades to Overweight from Equalweight - PT $22 (from $19)
$VSCO: Barclays Upgrades to Equalweight from Underweight - PT $25 (from $23)
Downgrades - Sep 18, 2024
$COR: BofA Downgrades to Neutral from Buy - PT $245 (from $275)
$EW: Jefferies Downgrades to Hold from Buy - PT $70 (from $85)
$INCY: Truist Securities Downgrades to Hold from Buy - PT $74 (from $83)
$POR: Barclays Downgrades to Equalweight from Overweight - PT $49 (from $48)
$RMD: Wolfe Research Downgrades to Underperform from Peerperform - PT $180
Nike price target raised to $84 from $80 at Barclays
Barclays analyst Adrienne Yih raised the firm's price target on Nike to $84 from $80 and keeps an Equal Weight rating on the shares. The firm expects "meaningful pressure" in Nike's fiscal Q1 due to "franchise lifecycle management" and China deceleration, but says expectations appear "sufficiently de-risked." Data checks indicate the company's North America sales may deliver upside, offset by a weakening macro backdrop in China, the analyst tells investors in a research note. In the near-term, Barclays believes Nike's fiscal 2025 guidance is achievable.
Bernstein says iPhone seasonality could be skewed by delayed rollout of AI
Bernstein analyst Toni Sacconaghi notes that reports suggest that the ramp for both iPhone 16 base and Pro models should be relatively normal/strong this year, but iPhone seasonality might be somewhat skewed by the delayed rollout of Apple Intelligence. The firm suspects Apple's advertising activity to step up significantly as AI features are released, potentially leading to somewhat different seasonality for iPhone 16. Bernstein further points out that initial iPhone lead times have historically had limited correlation with the strength of the cycle. With that said, the firm also highlights that Apple's commentary on its Q4 call about iPhone demand and its revenue guidance for the December quarter have historically not been well correlated with the strength of iPhone cycles. Bernstein has an Outperform rating on the shares with a price target of $240.
Broadcom initiated with an Outperform at William Blair
William Blair analyst Sebastien Naji initiated coverage of Broadcom with an Outperform rating. Broadcom is targeting $12B in AI revenue in FY24 and the firm sees room for continued steady growth into FY25 and FY26 driven by increasing custom chip demand, improved software monetization, recovery in non-AI semi chips and accelerating growth of Ethernet AI network fabrics, the analyst tells investors.
Arm initiated with an Outperform at William Blair
William Blair initiated coverage of Arm with an Outperform rating. The firm says Arm is a "critical vendor" of computing intellectual property with best-in-class" financials. Arm provides critical computing IP that underpins more than $200B in chip value across the mobile, automotive, internet of things and data center markets, the analyst tells investors in a research note. Blair believes Arm's royalty/licensing revenue model drives best-in-class profitability.
Applied DNA Sciences receives Linea DNA follow-on order
Applied DNA Sciences has received a follow-on order valued at more than $500,000 for a quantity of Linea DNA from a global manufacturer of in vitro diagnostics. The follow-on order was placed under a long-standing supply agreement for the bulk manufacture of Linea DNA used in the manufacture of a cancer diagnostic test. Applied DNA expects to deliver on the order over four quarterly shipments in calendar 2025.
SES AI rallies after announcing collaboration with Nvidia, Supermicro
SES AI (SES) announced an initiative to accelerate material discovery in electric transportation. "By mapping the universe of small molecules using a cutting-edge supercomputer optimized for artificial intelligence, this pioneering project aims to revolutionize the understanding of battery chemistry, enhance energy storage solutions, and advance energy efficient technology," the company said in a statement. SES AI will leverage Crusoe's AI cloud platform, powered by Nvidia (NVDA) and Supermicro (SMCI). "By collaborating with Crusoe, Nvidia, and Supermicro, we combine cutting-edge AI with sustainable computing infrastructure to drive breakthroughs in battery innovation. This project embodies our commitment to sustainability and technological advancement," stated Qichao Hu, CEO of SES AI. Shares of SES AI are up 27%, or 27c, to $1.30 in premarket trading.